PM Comments December 12 2024

Good afternoon. The winning streak in March corn ended at five days on Thursday, as the selling that emerged late in the session on Wednesday was carried through the overnight trade and into Thursday. The early October high at 4.52 1/4, as well as the 200-day moving average at 4.51 3/8, proved to be too large of a hurdle to cross as the weekend approaches, with the key for Friday being whether more selling emerges to take away all of the week's post-report gains. Wheat futures closed similarly lower on Thursday, while soybean futures traded lower for most of the day before seeing buying emerge at the noon hour to bring prices back closer to unchanged by the close.

 

CH closed at 4.43 1/2 on Thursday, down 4 and 3/4. CK was down 4 and 1/2 at 4.51. SF closed at 9.95 3/4, up 1/4 of a cent. SH was up a half cent at 10.03 1/4. Inside day for beans. WH closed at 5.58 1/2, down 4 3/4. Products were mixed, January soybean meal closed down $1.60/ton at 289.50, and January soybean oil closed at 42.67, up 23 points. Livestock markets were again mixed, February live cattle closed at 190.85, down 52 cents, January feeders closed at 258.35, down 70 cents, and February hogs closed at 84.47, up 10 cents. New high for the move in live cattle and an inside day for hogs. Outside markets are mixed, crude oil futures are down 10-20 cents/bbl, the Dow Jones index is down 250 points, and the US$ index is up 30-35 points. The S&P500 is down 30 points, and the NASDAQ is down 120 points. Inside day for both the S&P and the NASDAQ.

 

Spreads closed mixed, corn spreads were down a quarter cent to down 3 cents, and soybean spreads were down a quarter of a cent to up a penny and a quarter. CZ/CH closed at -11 3/4, down a penny and a half, and SF/SH closed at - 7 1/2, down a quarter of a cent. CH/CK made a new low for the week at -7 3/4. New contract lows for the WZ/WH wheat spread at -27 1/2.

 

USDA this morning announced a daily sales flash for the first time in a week; private exporters reported sales of 334,000 mt's of soybeans for delivery to unknown destinations during the 2024/25 marketing year. Sources have this sale rumored to be either China or the EU, with Chinese buyers seeking beans in recent days for Feb/March.

 

Weekly export sales data was also out this morning, and was disappointing relative to trade expectations for the first time in several weeks. Corn sales in the week ending December 5th were seen at 947k mt's. Featured buyers were Colombia (257,900 mt's), Mexico (194,900 mt's), and Japan (143,400 mt's), and current sales pace is now up 29% from last year. Soybean sales in the week totaled 1.174 mmt's; featured buyers were China (705k mt's), Spain (245,800 mt's) and Mexico (156,500 mt's). Unknown destinations were seen likely rolling 518,600 mt's into a known category, and current pace is now up 12% from last year. And wheat sales were seen at 290k tons for the week; featured buyers were the Philippines (92,000 mt's), Mexico (73,700 mt's), and Japan (56,900 mt's), and current pace is now up just 9% from last year. Soybean oil exports were also closely watched for again this week, with data showing the weekly total at 176k mt's. Total sales now account for roughly 96% of the USDA's newly revised full marketing year forecast, and current pace is up a whopping 1,597% from last year.

 

Other data out on Thursday included fresh Brazilian crop updates from Conab, though the numbers weren't anything to write home about. Soybean production was adjusted marginally higher from November to 166.211 mmt's, but this number still remains below the most recent USDA estimate at 169.0 mmt's. Planted area was seen about 13k hectares lower from last month at 47.37 mil. Corn production also did not see a lot of change; total production was estimated at 119.633 mmt's, down about 180 mmt's from last month, while second crop production was again left unchanged for the second consecutive month. Corn planted area was decreased by about 30k hectares, which likely contributed to the fall in total production. Conab's next crop update will come after the start of the new calendar year on January 14th.

 

Otherwise, markets are starting to slip more into holiday trading mode as the days go by, with volume likely noticeably beginning to contract starting tomorrow/early next week. We've said it many times now, but until harvest data either confirms or denies record soy potential in South America in another 6-8 weeks, the combination of this and a prospective trade war with our biggest bean buyer likely keeps rallies hard pressed. Corn will have a little better time short term as Brazil's second crop doesn't get planted until after the beans are cut in February/March, meaning a weather issue could still possibly develop between now and then. But should soil moisture remain plentiful, we would see it likely that this market also sees supply-based price pressures at some point between now and US planting this Spring.

 

Mid-day weather forecasts into the weekend continue to show the same general pattern that has been advertised week. Snow has been falling in a fairly narrow band through southwest Iowa and into central Illinois, while lake-effect snow has also impacted the northeast and parts of Wisconsin and Michigan through the day today. Heavy snow has also continued to fall at elevation in northern California and up further into the PNW. A low pressure system looks to provide rainfall to the central/western Midwest beginning late in the day tomorrow/early Saturday and lasting through the early part of next week, while a subsequent system is then seen moving through the same areas into the end of next week. Today's drought monitor update showed a small pocket in Tennessee that is still in D3/D4 drought, and these rains should go a long way to alleviating some of that stress. Beyond here, week-two forecasts remain in good agreement on a drier pattern for most of the country into the Christmas holiday. Though wet, the weekend does look to be warm for most of the Midwest with highs seen some 10-15 degrees F above average.

 

Forecast in South America also remains unchanged into the weekend; Over the next three days, southern and central Brazil look to receive rainfall of 2-3" with some locally heavier amounts, while northern and central Argentina will see similar totals but locations will be far more scattered. Southern Argentina will likely be the area most short-changed on moisture into early next week. No change at mid-day today in the 10-15 day outlook, as most of Argentina is still seen dry while most of Brazil continues to see good rains.